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Volume 2018 - Number 20

May 25, 2018

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Non-Agency MBS Making Big Strides in 2018 But Still Far From Being a Meaningful Market

2018 is shaping up to be the best year for the non-agency MBS market since the financial crisis, but its still just a small niche with potential.

GSE MBS Investors Facing Adverse-Selection Risk as Pricing Improves for Non-Agency MBS

Increased demand for non-agency MBS and pricing policies set by the government-sponsored enterprises are prompting some lenders to deliver high-quality GSE-eligible mortgages into non-agency MBS pools. If the trend persists, GSE MBS investors could face risks from adverse selection, according to industry analysts.

Senators Lose Faith in GSE Reform Happening in the Near Term and Worry Fannie, Freddie Have an Expansion Focus

Housing-finance reform wont happen in the near future and the government-sponsored enterprises are busy expanding their footprint instead of reducing it, according to lawmakers voicing concerns during a Senate Banking, Housing and Urban Affairs Committee hearing this week.

Booming CLO Market Poised to Experience Price Volatility; Investors Push Back Against Provisions

The collateralized loan obligation market is heading for some volatility, according to industry analysts. Issuance in the sector has been strong recently, but investors are preparing for short-term losses and fighting against certain provisions in deals.

Treasury Official Backs Stronger Non-Agency MBS Market but Offers Nothing on Fate of the GSEs

A key Treasury Department official said regulatory reform could help rejuvenate the non-agency MBS market but offered little guidance on the future prospects for Fannie Mae and Freddie Mac.

Bank ABS Holdings Edge Slightly Higher in 1Q18 As the Top Two Investors Add to Their Portfolios

Commercial banks and savings institutions held $113.75 billion of non-mortgage ABS in portfolio at the end of March, a scant 0.1 percent increase from the previous quarter, according to a new ranking and analysis by Inside MBS & ABS. [Includes two data charts.]

FHFA Releases First Report Detailing How It Monitors GSE Prepayment Speeds in Preparation for the UMBS

The Federal Housing Finance Agency went into more detail this week about the steps it is taking to make sure Fannie Mae and Freddie Mac prepayment rates are fairly congruent. And when the difference between the GSEs prepayment rates spreads beyond two percentage points, it must be reported to the FHFAs Single Security Governance Committee for an explanation and remedial actions.

FINRA Proposes to Retain ‘Agency-Debt Security’ Label for GSE CRTs under New Issuance Structure

The Financial Industry Regulatory Authority has filed a proposed rule with the Securities and Exchange Commission to modify the definition of agency debt security to include credit-risk transfers for reporting and compliance purposes.

MBS and ABS Issuance at a Glance: May 25, 2018

A full page of issuance data and MBS market indicators.

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